Extension of Homebuyer Tax Credit All But Certain

The Obama administration has come out in favor of extending the tax credit offered to homebuyers who have not owned a primary residence in the last 3 years.

Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan issued a statement earlier today that reads, in part, "this credit has made the difference in bringing new families into the housing market. Those buyers, in turn, have reduced the inventory of unsold homes and contributed to three months in a row of increases in home prices nationwide. A stronger housing market benefits homeowners and strengthens the financial system."

And it appears that the plan may be expanded to provide a new credit of $6500 to those buyers who have owned their current primary residence for at least the last five years. In addition, there is talk of increasing the maximum qualifying income limit from $75,000 to $125,000 for an individual and to $225,000 from $150,000 for couples.

Though the proposal must still pass through both houses of Congress, it looks all but certain that the tax credit will at least be extended, and likely expanded to include more homebuyers.

I'm aware of a number of buyers who have been reluctant to make offers, especially on short sales, for fear that their deal won't close escrow in time to take advantage of the credit. An extension of the tax credit will certainly encourage more people to buy now.

Senators Extend Tax Credit For Homebuyers

According to the Associated Press, the Senate has agreed to extend a tax credit for 1st time homebuyers that was set to expire December 1, and to expand it to include some repeat buyers.

Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, said that Senators have agreed to extend the tax credit while also offering a credit of up to $6500 to buyers who have owned their current principal residence for at least the last five years.

A congressional aide speaking anonymously to the AP also said that the tax credit would be available to buyers who sign purchase contracts by the end of April for transactions closing by the end of June.

The full Senate could vote on the bill as soon as tomorrow. Stay tuned!

Senate Democrats Agree To Extend Tax Credit

Reuters reported today that Democratic Sen. Christopher Dodd, chairman of the Senate Banking Committee, said that senior Democrats in the Senate have agreed to extend the first time homebuyers tax credit, which is scheduled to expire on December 1.

Dodd has earlier indicated that he'd like to extend the credit through June 30, 2010 and expand it to include all buyers purchasing a primary residence. Senate Majority Leader Harry Reid has backed a version that would extend the full credit until the end of March and then phase it out through 2010.

No details were released but according to Dodd, the agreement reached would blend these two proposals.

Bend Housing Market "Balanced?"

A widely-held theory is that about 6 months of available inventory represents a "balanced" or "neutral" real estate market, favoring neither buyers nor sellers. At September's rate of sales, the Bend area housing market has reached this balanced, neutral position.

There were 148 stick built houses on less than an acre reported sold in Bend for the month of September. There are currently 878 houses in Bend currently listed for sale in the MLS of Central Oregon. Dividing 878 by 148 gives us 5.93, which represents the "absorption rate," or the number of months it would take to "absorb" all of the houses listed today at September's sales pace.

Though different price ranges yield vastly different absorption rates, the overall market in Bend continues to show improvement.

Distressed Property Transactions Lead Sales Higher

Bank-owned properties, despite making up only about 6.6% of all houses listed for sale in Bend, accounted for more than 1 in every 3 houses reported sold in September.

According to data pulled from the MLS of Central Oregon, 139 sales of stick built houses on less than 1 acre closed escrow last month. Of these, 53 were bank-owned. In addition, 29 of the 139 sales were "short sales," which occur when a lender agrees to accept less than what is owed on the property.

September, 3rd Quarter Sales Continue Upward Trend

Lower prices, a wide array of houses to choose from and near record low interest rates helped sales of single family homes in the Bend area increase 13.9% in September from a year earlier. And for the 3rd quarter, sales activity was up 32.4% from the 3rd quarter of 2008, according to data compiled from the MLS of Central Oregon.